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Housing Wrap: BoC's June Rate Cut May Ignite Sales After A Soft May

CANADA
  • Market was soft in May as buyers anticipated interest-rate cuts. Next month's data will be the first since the BoC June cut, the first in four years and from the highest since 2001.
  • May home sales -0.6% MOM and -5.9% YOY; average resale prices -4% YOY and the house price index -2.4% YOY.
  • Teranet Housing Index prices +5.7% YOY, same pace as last month.
  • New listings +0.5% MOM, the fourth increase in the past 5M. CREA said listing are about the highest over last 5Y.
  • Starts +10% in May to 265K, the 6M moving average +3.8%. CMHC's chief economist expects downward pressure on starts through rest of 2024.
  • Desjardins expects starts to slow 15% to an average of around 229k in 2024 as it will take time before rate cuts renew postponed construction.
  • Household liabilities slowest since Q1 2023 in Q1 2024 at +0.3% as interest rates weigh on borrowing.
  • Toronto’s real estate board economist on CREA webcast casts doubt that BOC cut will spur major rebound: “We probably need to see 100 basis points, 150 basis points before we start to see a real marked acceleration in sales activity. We'll see stronger activity in the second half of 2024, but even more so as we move into 2025.”
  • Focus remains on half of mortgage borrowers facing a major upward reset of rates over next two years.
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